Fraud Risks

• Chargeback Fraud
  • Donors disputing charges after making contributions
• Identity Theft
  • Unauthorized use of personal information to make fraudulent donations
• Money Laundering
  • Using charitable donations to process illicit funds
• Donation Fraud
  • Fraudulent claims of donations for tax deductions
• Account Takeover
  • Unauthorized access to donor accounts for fraudulent activities

Regulatory Challenges

• PCI DSS Compliance
  • Ensuring secure handling of payment card data
• Non-Profit Regulations
  • Adherence to laws governing tax-exempt organizations
• Anti-Money Laundering (AML) Laws
  • Compliance with regulations to detect and prevent money laundering
• Data Protection Laws
  • Compliance with GDPR, CCPA, and other privacy regulations
• Consumer Protection Laws
  • Transparent disclosure of how funds are used

Chargeback Triggers

• Unauthorized Transactions
  • Charges not recognized by the donor
• Billing Errors
  • Incorrect amounts or duplicate charges
• Service Disputes
  • Claims that promised benefits or services were not provided
• Contractual Disagreements
  • Conflicts over membership terms or fees
• Fraudulent Representation
  • Allegations of misrepresentation by the organization

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Multiple Payments from the Same Card

• One card used to make several donations or payments

Unusual Payment Patterns

• Large donations followed by refund requests to different accounts

International Payments for Local Organizations

• Foreign transactions not typical for the group's donor base

Inconsistent Donor Information

• Discrepancies between donor details and payment data

High-Value Donations from New Donors

• Significant contributions without prior engagement with the organization

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Business Verification

• Confirm the organization's legal status and tax-exempt certifications
• Verify the physical address and contact information
• Check compliance with non-profit regulations and reporting requirements
• Review the organization's mission, history, and reputation

Financial Assessment

• Review financial statements for revenue stability and financial health
• Analyze average transaction amounts and processing volumes
• Assess the impact of fundraising events and campaigns on cash flow

Risk Evaluation

• Examine historical chargeback ratios and reasons
• Assess fraud prevention measures and data security protocols
• Review policies for handling donations, refunds, and dispute resolution

Policy Review

• Ensure clear terms and conditions for donations and memberships
• Verify that refund and cancellation policies are transparent
• Evaluate compliance with data protection and privacy regulations

Technology Assessment

• Confirm the use of secure, up-to-date payment processing systems
• Ensure encryption and tokenization are implemented for data protection
• Verify adherence to PCI DSS and other security standards

Reputation Analysis

• Check online reviews and ratings on relevant platforms
• Investigate any history of regulatory violations or legal issues
• Assess donor satisfaction and responsiveness to concerns

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Spike in High-Value Donations

• Sudden increase in large contributions from unknown donors, potentially indicating money laundering

Multiple Chargebacks After Fundraising Events

• Attendees disputing charges post-event, suggesting dissatisfaction or fraud

Payments from Unrelated Third Parties

• Donations made by individuals not associated with the donor, raising concerns

Inconsistent Reporting

• Discrepancies in financial reports or lack of transparency in fund allocation

Frequent Refund Requests

• Regular demands for refunds, possibly signaling financial instability or fraudulent activity

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Organization Details

• What is the mission and purpose of your organization?
• How long have you been operating?
• Do you hold any tax-exempt or non-profit status?

Payment Processing Methods

• What payment options are available to donors?
• Do you accept recurring donations?
• How do you handle international payments, if applicable?

Fraud Prevention Measures

• What procedures are in place to verify donor identities?
• How do you secure personal and payment data?
• Do you utilize any fraud detection tools or services?

Regulatory Compliance

• Are you compliant with PCI DSS and data protection regulations?
• How do you ensure adherence to non-profit reporting requirements?
• What measures are in place to comply with AML laws?

Refund and Cancellation Policies

• What is your policy on donation refunds?
• How are these policies communicated to donors?
• Do you have clear terms regarding the use of funds?

Donor Service and Support

• What channels are available for donor communication?
• How do you handle complaints or concerns about donations or fund usage?
• Do you provide regular updates or reports to donors?

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Transaction Monitoring

• Implement real-time alerts for suspicious activities
• Regularly review transaction reports for anomalies or patterns indicative of fraud
• Monitor for multiple payments from the same source or rapid chargebacks

Compliance Checks

• Ensure continuous adherence to PCI DSS, AML, and other regulatory requirements
• Stay updated on changes in non-profit laws and implement necessary adjustments
• Conduct regular audits of payment systems and data security measures

Security Updates

• Keep systems and software up to date with security patches
• Implement advanced security features like encryption and multi-factor authentication
• Train staff on the latest cybersecurity practices and data protection policies

Merchant Communication

• Maintain open dialogue regarding changes in operations or services offered
• Provide resources and support for fraud prevention and compliance
• Encourage reporting of any suspicious activities or security concerns

Risk Assessment Adjustments

• Reevaluate risk parameters based on changes in transaction volumes or patterns
• Update underwriting policies as necessary to reflect current risks
• Monitor fundraising campaigns and events that may affect transaction activity

Donor Feedback Analysis

• Monitor reviews and feedback on social media and relevant platforms
• Address negative feedback promptly to improve donor satisfaction
• Use feedback to identify potential areas of risk or concern

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